State of IllinoisRod R. Blagojevich, Governor

Department of Commerce and Economic Opportunity

FIRST STOP’S MISSION:To provide comprehensive

information and technical

support to businesses with

questions and concerns about

government regulations,

requirements, and assistance

programs.

Illinois Department of Commerce and Economic OpportunityIllinois Small Business Office

2004 Annual Report

August 2004

TO THE GOVERNOR AND MEMBERS OF THE GENERAL ASSEMBLY:

In accordance with the provisions of Public Act 88-0404, the Business Assistance andRegula-tory Reform Act (Act), the Illinois Department of Commerce and EconomicOpportunity (DCEO) respectfully submits this calendar year 2004 annual report on theFirst Stop Business In-formation Center. As directed by the Act, DCEO’s Small BusinessOffice oversees the First Stop Business Information Center, as statewide resource fornew and existing business owners who have questions or concerns about state andfederal business requirements, business assis-tance and the regulatory process.

First Stop is integrated with the Illinois Entrepreneurship Network to provideentrepreneurs a seamless array of services. A team of representatives from the businesscommunity and the SBDC Network, as well as other state agencies, planned First Stop.Designed and managed with customer service as its highest priority, First Stop seeks tobe the foremost resource for informa-tion, compliance assistance and advocacy forbusinesses dealing with government red tape and bureaucracy.

First Stop has proven to be effective and successful in working with entrepreneurs,small business owners and organizations that historically view government as animpediment to business growth. It is a fact that small businesses, especially in theleanest of times, create the majority of net new jobs. This being so, it is imperative thatgovernment continue to responsibly remove the impediments, lessen the regulatoryburdens, and encourage the growth and formation of small businesses in Illinois.

This annual report reflects the 2004 achievements of the First Stop Business InformationCenter, one of Illinois’ finest assets for improving business competitiveness throughcomprehensive as-sistance. Please contact my office if you have any questions or needfurther information.

Sincerely,

Jack Lavin, Director

Illinois Department of Commerce and Community Affairs

ILLINOIS DEPARTMENT OF COMMERCE AND COMMUNITY AFFAIRS

1

The cornerstone to the success of First Stop is its personnel and their commitment to providingprofessional, comprehensive customer service. Listed below are First Stop’s primary services.

• BUSINESS SPECIALISTS: The core of First Stop’s services is the professionals that handle thethousands of inquiries that come in via the toll-free business help line, e-mail, standard mailand walk-ins. When a business encounters difficulty with the state regulatory process, theBusiness Specialists serve as advocates for small businesses, working to find a solution thatboth the business and state agency find mutually acceptable. First Stop staff provides expertguidance in linking pre-business ventures and existing business owners to federal, state andlocal government resources. The Specialists help dispel the common perception that gov-ernment is inaccessible to small businesses.

• TOLL-FREE CALL INTAKE CENTER: Calls into First Stop via the toll-free number are received byhighly trained customer service representatives. The call center handles the high percentageof requests for basic information as well as mail fulfillment regarding the business startupkits. A large number of these calls are referred to the Illinois Entrepreneurship Network (IEN)where clients can arrange an appointment to meet for professional one on one businesscounseling, assistance in developing business plans, exporting assistance and governmentcontracting opportunities. Requests for in-depth assistance, advocacy and research areseamlessly forwarded to the Business Specialists at First Stop who have the expertise to thor-oughly assist the customer.

• HISPANIC OUTREACH: As an outreach effort to educate prospectiveentrepreneurs in Illinois’ growing Hispanic population, First Stophas converted its most popular publications, such as the Step byStep Guide to Starting a Business in Illinois, to Spanish. In January2000, First Stop added a bilingual customer service representativeto serve its Spanish-speaking clients.

• REGULATORY FLEXIBILITY PROGRAM: The “Reg Flex” staff examines proposed rules and regulationsaffecting the small business community and through impact analysis recommends ways ofmaking the rules more flexible, cost effective or less restrictive for small business. TheRegulatory Flexibility Program’s 2004 activities are included in this report.

FIRST STOP SERVICES

2004 Annual Report

“ First Stop staff was very efficientand I’m very satisfied with thereceived information.”

Miriam Oliva, Chicago, IL(Spanish speaking client)

2

First Stop’s publications are an integral part of the services provided to customers. The num-ber and variety of publications has grown through the years reflecting customer demands forinformation.

• STARTING A BUSINESS IN ILLINOIS HANDBOOK: This 42-pagebooklet is the core of the business startup kit First Stopsends out and is heralded by the business communityas one of the most useful publications of its kind. It fea-tures answers to the basic questions and issues facingnew business ventures, including a business feasibilitychecklist; a business plan outline; listings of essentialstate, federal and local agencies; and, much other useful information. It is the most down-loaded document offered on IEN’s web site (www.ienconnect.com) and more than 20,000hard-copies are distributed annually. It is also available in Spanish.

• DIRECTORY OF BUSINESS PROFILES, REQUIREMENTS AND ASSISTANCE PROGRAMS: This comprehensivedatabase of more than 450 profiles of state business permits, licenses, certifications andassistance programs have been enhanced to include profiles of the top 100 most popularbusiness startups. It is available on IEN’s web site in an easy-to-search application, or by call-ing First Stop through its toll-free business help line.

• FINANCING MATRIX: This comprehensive and popular document lists in an easy to understandformat the variety of state and federal small business financing programs that are available.The Financing Matrix is available on DCEO’s web site and in hardcopy.

• ILLINOIS CHILD CARE RESOURCE GUIDE: As a part of the DCEO Small Business Office’s highlysuccessful Day Care Initiative, First Stop collaborated with other state and federal agencies,the Illinois State Treasurer’s Office, the University of Illinois at Champaign-Urbana, and theIllinois Network on Child Care Resource and Referral Agencies to create this valuableresource guide. The guide is a four-part publication:

G A GUIDE FOR FAMILY PROVIDERS outlines the steps necessary for family providers to start ahome child care program

G DEVELOPING CENTER-BASED PROGRAMS outlines the steps necessary for starting a center-basedchild program

G OPTIONS FOR EMPLOYERS outlines available options for companies assisting employees withchild care

G DEVELOPING COMMUNITY PROGRAMS outlines the steps necessary for developing communitychild care programs

FIRST STOP PUBLICATIONS

2004 Annual Report

“ Information contained within “Starting aBusiness in Illinois” gave a very good over-view on what needs to be done in startinga business and what to keep in mind oncea business is up and running.”

Edward Rodek, Springfield, IL

3

• CHILD CARE START-UP PROFILE: This 29-page booklet, written and produced by First Stop, is astraight-forward guide for starting a day care. It is separated into two sections, one gearedtoward those hoping to establish a home child care business and the other for those estab-lishing a larger scale child care center. It is also available in Spanish

• PROPOSAL WRITING GUIDE: To meet the demand from individuals interested in starting a non-profit organization but having no resources to turn to, First Stop offers this 52-page bookletto help nonprofit community program developers and planners with the basic elements andconcepts in planning and preparing winning proposals for project funding.

• STEP BY STEP GUIDE TO STARTING A BUSINESS: This brochure, an abbreviated version of theStarting a Business handbook is less expensive to reproduce yet provides a concise and col-orful publication useful in mass marketing activities such as small business expositions,mailings to chambers of commerce, libraries, county clerks and other similar venues. It isalso available in Spanish.

• eCOMMERCE BUSINESS START-UP PROFILE: This booklet, a combined effort by BraddockCommunications, Inc., the College of Business and Technology at Western Illinois Universityand First Stop, gives prospective and existing business owners guidance when starting orexpanding their business into the e-commerce arena.

• RESTAURANT STARTUP PROFILE: This 46-page booklet is a combined effort by the Illinois Institutefor Rural Affairs at Western Illinois University and the Illinois Department of Commerce andEconomic Opportunity. It is a resource to facilitate startup or help existing restaurant ownersoperate more profitably. This was made available in Spanish on 2004 via DCEO’s web site.

• GROCERY/CONVENIENCE STORE PROFILE: This 38-page booklet is a combined effort by the IllinoisInstitute for Rural Affairs at Western Illinois University and the Illinois Department ofCommerce and Economic Opportunity. It is a resource to facilitate startup or help existingstore owners operate more profitably.

NEW FOR 2002

• THE BUSINESS START-UP EXPERT: This business card sized compact disk is First Stop’s effort tocreate innovative, cost effective ways to make information readily available to its customers.This business card disk literally replaces hundreds of pages of small business informationand links users to in-depth web resources. The Expert is a virtual business start-up library.

• BUSINESS MANAGEMENT GUIDES: Through a partnership with New Ground Publications, FirstStop and the Small Business Office have made 3 management guides available via DCEO’sweb site. These management guides are:

G A SIMPLE GUIDE TO YOUR COMPANY’S FINANCIAL STATEMENTS

G THE SMALL BUSINESS OWNER’S GUIDE TO FINANCIAL CONTROL

G UNDERSTANDING COMMERCIAL LENDING: THE QUESTION AND ANSWER GUIDE

• WINERY PROFILE: This 67-page booklet, released in 2002, is a combined effort by SouthernIllinois University Small Business Development Center, Illinois Grape and Wine ResourcesCouncil and the First Stop Business Information Center. This profile complements the State’scurrent efforts to increase a growing industry in Illinois and to boost tourism.

2004 Annual Report

4

What has the First Stop Business Information Center accomplished in 2004? Below arenumerical as well as testimonial measures of First Stop’s performance.

CLIENT ACTIVITY MEASURES CY2004 CY2003 CY2002Total First Stop Client Activity 20,224 18,136 19,554Business Startup Kits Issued 6,531 7,011 7,997Sources of Financing Cases 1,907 1,699 2,329Licensing and Registration Cases 8,837 7,192 6,072Market Research Cases 345 145 194Government Contracting Cases 141 134 192International Trade Cases 10 16 25General Business and Other Cases 1,596 1,698 2,550

CLIENTS REFERRED TO SBDC NETWORK: CY2004 CY2003 CY2002Small Business Development Centers 3,550 2,946 3,939International Trade Centers / NAFTA Opportunity Centers 12 62 80Procurement Technical Assistance Centers 115 114 235

ANNUAL NUMBER OF FIRST STOP CLIENTS SINCE INCEPTION.August 1995 – December 2004

FIRST STOP CLIENT ASSISTANCE PERFORMANCE

CY '95 CY '96 CY '97 CY '98 CY '99 CY '00 CY '01 CY '02 CY '903 CY '040

5

10

15

20

25

Client Activity in Thousands

1140

7132

1223411244

1569614981 15251

19554

18136

20228

2004 Annual Report

“ This was wonderful; I never knew thatthe State of Illinois made opening abusiness so much easier.”

J. M., Glen Carbon, IL

5

As in the private sector, the leading edge goes to the organizations that strive for and providesuperior customer service. Instituted early in its beginning, First Stop surveys its clients todetermine their satisfaction on key areas including: professionalism, promptness, knowl-edge, courtesy, value, and saving time and money. First Stop’s business specialists follow upwith any respondent who is less than satisfied with the service they receive. Results for 2004are consistent with past years.

• PERCENT OF CUSTOMERS SURVEYED INDICATINGFIRST STOP SAVED THEM TIME AND/OR MONEY 98%(147out of 150 total responses)

• PERCENT OF CUSTOMERS SURVEYED INDICATING A HIGHDEGREE OF SATISFACTION WITH PRODUCTS AND SERVICES 95%(1226 out of 1296 total responses)

SOME OF FIRST STOP’S CUSTOMER COMMENTS FROM 2004 SURVEYS(For privacy respondents full names are withheld)

“ Your staff is Awesome. I called near 5:00 p.m. and the gentleman was not trying to hurryme off the phone.”

J. B., Cahokia, IL

“ I think it's a great resource but many people may not be aware of it or how to avail them-selves of the service.”

C. J., Chicago, IL

“ Very helpful, concise and to the point, we are very thankful for the help.”CA. J., Chicago, IL

“ The service I received really met my needs. I'm so thankful for the information. Supervaluable for me... Thank you very much!” O. H., Chicago, IL

“ I called your on a Sunday afternoon. I liked being able to leave a message.”R. K., Belleville, IL

FIRST STOPCUSTOMER SERVICE

2004 Annual Report“ The customer service rep. was

extremely helpful and went (I feel)above the call of duty and researchedinformation on my behalf.”

S. N. Talbert, Markham, IL

6

In addition to clients assisted with various regulatory assistance requests, First Stop alsopro-actively reached out to small businesses through the Regulatory Flexibility Program.Better known as Reg Flex, this program calls for DCEO to serve as a regulatory watchdog forsmall businesses.

First Stop’s Reg Flex staff reviews every state proposed rule, then publishes a weekly RegulatoryAlert that summarizes the rules that will impact small businesses. More than 600business/trade associations and individual businesses receive the “Reg Alert”. Their commentsare used when Reg Flex writes impact analyses which are submitted to the Joint Committee onAdministrative Rules (JCAR), as well as the issuing state agency. Analyses often recommendways to reduce or eliminate onerous aspects of the proposed rule.

Additionally, the Reg Flex staff research all proposed legislation and post those impacting smallbusinesses to the DCEO web site. The following information is a summary of RegulatoryFlexibility Program staff activities for calendar year 2004:

• 400 Proposed State Regulations were reviewed

• 112 Proposed Regulations that affect small businesses were summarized

• 52 issues of Regulatory Alert, were sent to over 400 small business owners, business andtrade associations

• 101 Small Business Impact Analyses for consideration by JCAR were conducted

• Hearings were attended on various proposed rules in which agencies elicited public inputregarding the impact rules will have on businesses

• Legislation from the 94st General Session that would impact small businesses was trackedfrom the time the bill was introduced through veto session; a log of the status of each bill wasmaintained on DCEO’s Small Business web page.

FIRST STOP REGULATORYRELIEF ACTIVITIES

2004 Annual Report

7

First Stop’s Regulatory Flexibility program initiated an effort in the fall of 2001 to evaluate theimpact of state laws and regulations on small businesses in Illinois under the direction of PA92-0298. The purpose was to determine which laws and regulations impede the creation ofsmall businesses or create economic damages for existing businesses, that jeopardize thecontinuation of industry groups in the marketplace or their valuable contribution to the eco-nomic growth of the state.

The Illinois State Regulations Report was prepared by the Center for Governmental Studies andthe College of Business at Northern Illinois University. The project included a review of relevantstudies and findings; conducted focus groups meetings, each with specific industries; distrib-uted a survey to small businesses; and analyzed results. Below is a summary of the study.Copies of the complete study are available by contacting First Stop.

STUDY OF LAW REGULATIONS IMPEDING SMALL BUSINESS GROWTH

STUDY SYNOPSIS• Most respondents to the survey reported there were no taxes that presented difficulties when starting

their business. More reported difficulties with taxes in running their business rather than during busi-ness start up. Most indicate that the taxes presenting the most difficulties are employment regulationsand sales taxes.

• Most respondents reported little effect of taxes and regulations on the number of people theyemploy. Rather, taxes and regulations have a greater impact on profits and sales. Nearly 50% report-ed a negative impact of unemployment taxes and workers’ compensation.

• The impact of state laws and regulations did not vary significantly across industry groups.

• Respondents from Chicago/Metro region were more satisfied with state laws and regulations thanrespondents from downstate.

• Based on the length of time in business, there were few differences between newer businesses andthose in business for longer periods of time with the exception of environmental regulations.Respondents in business for more than 15 years reported a greater negative impact as a result ofenvironmental regulations. In general, respondents in business for more than 15 years may beindicative of the increase in number and complexity of these regulations over the past 20 years;whereas, respondents in business for a shorter time period have not experienced as many changes.

• Respondents with more employees and higher gross annual sales were more likely to report difficultieswith all areas of taxes and regulations.

UNEMPLOYMENT TAXMore than one-third of respondents did not believe Illinois unemployment taxes make it easy to dobusiness in Illinois. The one issue most often cited by respondents as a problem with unemploymenttaxes was the required reporting and recording of information.

The impact of unemployment taxes appear to be greatest on manufacturing/industrial machine andtransportation/trucking industry groups, and least on the manufacturing/printing and personal serv-ices industry groups. The construction industry group was most likely to agree that compliance,reporting, and recording unemployment taxes was easy compared to other industry groups.

In general, respondents across all industry groups reported no effect on the number of peopleemployed due to unemployment taxes. Unemployment taxes have impacted businesses with higherannual sales significantly more than those with smaller sales.

2004 Annual Report

8

SALES TAXResponse to sales taxes were similar to those for unemployment taxes. Nearly 40% of respondents donot believe that sales taxes make it easy to do business in Illinois. Between 25%-30% reported that get-ting information, complying, reporting and recording Illinois sales taxes was not easy. Most respon-dents indicated that sales taxes had no effect on gross sales.

The computer/manufacturing industry group was significantly less satisfied with all aspects of salesthan other industry groups. The retail industry respondents reported that compliance, simplicity ofreporting and recording sales tax information is easy.

The auto/repair industry group reported the greatest impact on the number of people employed dueto sales taxes.

WORKERS’ COMPENSATIONWorkers’ compensation seems to cause significant problems for Illinois’ small businesses. Nearly halfof the respondents disagreed that the workers’ compensation policies and paperwork involved werefair to small businesses they also reported a decrease in profits as a result.

While a majority of respondents disagreed that workers’ comp is fair to small business, an analysis byindustry groups indicates that the construction and transportation/trucking groups disagreed mostwith this statement.

Almost half of respondents reported that workers’comp decreased profits to some degree, and that itis unfair to small businesses. Respondents from outside Chicago/Metro area were significantly lesssatisfied with the fairness of workers’ comp.

ENVIRONMENTAL REGULATIONResponses about the effect of environmental regulations on small businesses were mixed. More busi-nesses disagreed than agreed that environmental regulations make it easy to do business in Illinois.Approximately equal numbers agreed and disagreed that it was easy to get information, easy to complywith regulations, and compliance was not burdensome on their ability to be competitive. However, theresponses to six other questions were not favorable. The majority felt environmental regulations werenot fair to small business, said the paperwork was not reasonable, said the regulations were not easy tounderstand, said they were not easy to find out about when starting their business, said it was not easyto keep current and that they made it harder for small businesses to compete with larger businesses.

Environmental regulations had a strong effect on profits. Approximately 25% of respondents saidtheir profits had decreased as a result of environmental regulations.

Similar to other tax and policy regulations studied, environmental regulations seemed to cause fewproblems for business start up. 94% indicated they had no difficulties with start up, and 85% said thatenvironmental regulations present no difficulties in running business.

Nearly 44% of respondents from the auto dealer/repair industry group reported a decrease in profitsas a result of environmental regulations. The impact of environmental regulations based on regionwithin Illinois indicated greater dissatisfaction in ease in compliance, fairness, and policies by smallbusinesses outside of the Chicago/Metro area.

CONCLUSIONWorkmen’s compensation and unemployment taxes have, overall, the strongest negative impact onsmall businesses in Illinois. While environmental regulations affect far fewer firms, the impact ofthose regulations is more severe.

2004 Annual Report“ Super, excellent service! I am

so happy my tax dollars arebeing spent well. ”

A. F., Willowbrook, IL

9

The First Stop Business Information Center, as part of the Illinois Entrepreneurship Network,is committed to providing the best possible service to Illinois’ small businesses and entrepre-neurs. The economy continues to put emphasis on the need to foster new business growthand innovation. As studies consistently show, small and emerging companies are the creatorsof nearly all new jobs.

First Stop’s job is to remove impediments to business growth by making the government regu-latory process less burdensome and easier to negotiate. First Stop will continue to developstronger advocacy ties to the State’s regulating agencies in order to develop a comprehensiveapproach to decreasing negative enforcement action while increasing regulatory compliance.

To further address small businesses need for information, First Stop will continue to use stateof the market technology such as enhancing the IEN’s web site to allow entrepreneurs andsmall businesses access to comprehensive permitting information, financing and technicalassistance tools, as well as real time answers to their questions.

Finally, First Stop’s role in the IEN will intensify outreach efforts to business groups to ensurethat more small business owners become aware and take advantage of the services offered bythe State of Illinois.

For questions or comments regarding this report, please contact Darryl Thomas, acting managerof the First Stop Business Information Center at 217/785-6190.

STRATEGIC FUTURE

2004 Annual Report

Printed by the Authority of the State of Illinois. Printed on Recycled PaperW.O. 06-0190 500 3/06